Smart50 rank: 2
Revenue: $2.41 million
Growth: 121.35%
Founders: Peter Thornton, 45; Richard Eastes, 29; David Eastes, 24
Based: Queensland
Employees: 10
Industry: Internet
Website: www.vroomvroomvroom.com.au
Remember when you rented a car by calling a travel agent or a direct supplier like Avis or Budget? In 2002 the founders of Vroom identified a niche in the online car rental industry and saw a massive potential to rank well in search engines.
Back then convincing suppliers to believe in the product and to have faith in the online arena was tough. But in the last three years the company has experienced growth of 121%, and takes second place in the SmartCompany Awards list with revenue of $2.4 million, up from $1.3 million in 2006-07.
One of the company's main weapons to gain new customers has been search engine techniques. The company started using pay per click. "Nowadays the cost of pay per click advertising is at least five times what it was back then, and it's a lot harder to get a return on investment of online advertising," director Peter Thornton says. "So back then we made a decision to commit a lot of resources to making sure we ranked number one on Google for all types of car rental related search terms."
They also used a technique similar to that which Wotif has done for hotels. "We brought a comparison engine that shows prices side-by-side and people can easily see which car they want because they can see the prices all at once," says Thornton. "We compare all major suppliers and provide the easiest and most reliable online car rental booking system. VVV make 500 to 700 bookings a day and approximately 14,000 to 15,000 bookings a month."
A few years ago the company had major cash flow issues. A few staff went a month without pay. "We had signed a deal to sell half the company for a very discounted price," says Thornton. "Thankfully the deal fell through because we would not be half the company we are today. Once again we learned to believe in our product. You have to trust your gut instinct."
The company is planning to move to the United States. "We currently run the majority of the business from Brisbane but to have a chance in the US we need a presence. We have a customer service team, PR team and we are working on some crazy ideas to expose VVV to the public. Our goal is to have the same amount of brand recognition in the US as we do for Australia," he says. They are not taking the entry lightly. "To disrupt the US market, we're going to offset the carbon emissions of all rental cars. VVV is also undertaking a non-profit project to help the environment. In this project we are sponsoring companies to become more environmentally friendly, in exchange for free advertising," he says.
Meanwhile the industry is rapidly changing. "We now have at least five competitors who run a very similar product to us. So we are always innovating ideas to stay ahead of the pack," he says. "But we have definitely increased the competitiveness of our suppliers. We notice massive prices drops for many of the suppliers' daily car rental rates. The suppliers now make next to no profit on the bookings and rely on added extras for profit areas such as insurance, GPS and baby seats."
